Snap election could halt any slow-down in construction demand

A snap general election could offer greater business certainty and lead to a more positive long-term outlook for construction. The progress of EU negotiations is a major influencing factor on the health of the market. This means that the threat of economic volatility and a potential two-year demand slow-down could be averted if a newly-elected government with a clearer mandate can promise British construction more certainty.

Will Waller

"In the next phase of Brexit, construction must walk a tightrope between short-term flexibility and long-term commitment."

Britain had the best performing economy in the G7 last year and the outlook for growth in both price and demand is relatively optimistic. Infrastructure prices are expected to remain buoyant, and there is less chance of a slowdown in the commercial market this year.

Looking at currency costs, the impact of falling sterling is now more-or-less understood. While some costs such as labour rose over five 5 percent, materials and commodity prices still remain at historic lows. Therefore, any strengthening of sterling – a likely scenario in the wake of the snap election – could see cost increases for materials begin to slow.

Last year, construction activity peaked at £100bn, led by demand in both the housing and infrastructure markets. House building activity, in particular, has doubled since 2010. Meanwhile, tender price inflation has continued to outstrip input cost inflation in recent years.

However, if demand for construction begins to slip then a simultaneous fall in tender prices is still possible in some areas, even if input costs such as labour were to rise. The UK needs a secure and stable political environment to ensure demand levels are sustained.

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Will Waller

Arcadis White paper

Lifting the lid on Pandora's Box - A change of pace for British Construction

A snap general election could offer greater business certainty and lead to a more positive long-term outlook for construction. The progress of EU negotiations is a major influencing factor on the health of the market. This means that the threat of economic volatility and a potential two-year demand slow-down could be averted if a newly-elected government with a clearer mandate can promise British construction more certainty.